THE LOST DECADES OF JAPAN AND THE GREAT

RECESSION OF THE U.S.: A COMPARATIVE LOOK

ANDREW BLANFORD

INTRODUCTION

• Similarities and differences in the reasons leading up to, causing, and following the recessions each of these economies faced and some lessons learned.

• The “Lost Decades” of Japan

• Late 1990s till present

• The Great Recession of the United States

• December 2007 till June 2009

• Low growth rates

BRIEF DESCRIPTION

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• Japan• 10% growth from 1950s until the 1970s

• Oil Crises keep inflation around 5% in the 70s and 80s

• Less than 2% after recession

• United States• Consistent growth around 3%

• Japan affected much greater by recession than US

SIMILARITIES

DIFFERENCES

• Japan GDP very close to US until the oil shocks of the 70s and early 80s

• Golden Years of Japan mid 1980s (Boom Period)• Thought might surpass the US by the mid 90s or 2000

• Recession in Japan in late 90s • Remained volatile below $5 trillion (Lost Decades)

• Due to very low growth rates

• The US experienced parabolic growth

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LESSONS

Japan• Smarter lending behavior by banks to avoid

zombie firms and credit bubble

• Reform from lifetime employment policy to comply with high tech industries demands for higher educated skill specific employees

United States• Smarter lending by banks to avoid credit bubble

• More faith in the stock market and smarter investment decision making

• Jobs are our greatest assets